All financial figures are in Canadian dollars ($ or C$) and all references to barrels are per barrel of bitumen sales unless otherwise noted

CALGARY – MEG Energy Corp. (TSX:MEG, “MEG” or the “Corporation”) announced today a 20% reduction in its 2020 capital program to $200 million from the original $250 million budget announced November 2019.

Capital Program Reduction and Guidance Update

Due to the recent significant degradation in global oil prices, MEG is reducing its 2020 full year capital budget by 20% from $250 million to $200 million.

The majority of the $50 million capital reduction is a result of reducing planned turnaround scope in the third quarter and deferring costs associated with well pairs that were previously targeted to come on stream in 2020 to bring post-turnaround production to approximately 100,000 bbls/d. Given this reduction in capital, MEG is revising its full year 2020 production guidance range to 93,000 – 95,000 bbls/d from the Corporation’s previously announced guidance of 94,000 – 97,000 bbls/d. The Corporation’s 2020 non-energy operating costs and general and administrative expense are targeted to remain within the original guidance ranges of $4.50 – $4.90 per barrel and $1.75 – $1.85 per barrel, respectively.

At current strip pricing, MEG expects to fully fund its revised 2020 capital program with internally generated adjusted funds flow.

For the first half of 2020, MEG has entered into benchmark WTI fixed price swaps for approximately 70% of forecast first half 2020 production volumes at an average price of US$59.15 per barrel. On a full year basis, MEG has hedged approximately 55% of forecast 2020 production via benchmark WTI fixed price swaps and WTI fixed price swaps with sold put options. Additionally, the Corporation has hedged approximately 30% of its WTI:WCS differential exposure at an average price of (US$19.39) per barrel and approximately 50% of condensate exposure at an average price of 101% of WTI. The table below reflects MEG’s current 2020 financial and physical hedge positions.

Includes fixed price swaps and sold put options entered into for the second half of 2020. At an average 2H20 WTI price of US$52.00 per barrel or higher, MEG’s effective WTI hedge price for 2H20 is US$59.30 per barrel. Illustratively, at an average 2H20 WTI price of US$45.00 and US$35.00 per barrel, MEG’s effective WTI hedged price for 2H20 is US$55.55 and US$50.20 per barrel, respectively.

(2)

2020 includes approximately 13,200 bbls/d of physical forward rail blend sales at a fixed WTI:AWB differential.

(3)

2020 includes approximately 7,250 bbls/d (annual average) of physical forward condensate purchases. Where applicable, the average % of WTI landed in Edmonton includes estimated net transportation costs to Edmonton.

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